Tennessee attorney general declares all paid fantasy sports are illegal

Taking it a step further than Alabama's attorney general, who sent cease-and-desist letters to DraftKings and FanDuel this week after saying that daily fantasy sports sites are illegal, Tennessee's attorney general maintains that all fantasy sports with an entry fee are illegal in his state.

That's the view of attorney general Herbert Slatery in an opinion that was released Wednesday.

The statutory definition of "gambling" is straightforward and unequivocal. In short, "gambling" in Tennessee means "risking anything of value for a profit whose return is to any degree contingent on chance," subject to the three stated exceptions. It is well established that clear and unambiguous statutes must be given effect as written. Fantasy sports contests fall within the broad definition of "gambling" under Tennessee Code Annotated § 39-17-501(1).

The participants pay an entry fee in order to win a prize. A portion of the fees comprise the pot of funds that are paid out to the winning participants...

Tennessee joins 12 other states—including, recently, Texas and New York—in declaring DFS contests illegal. But Tennessee goes further because most states don't consider all fantasy sports gambling illegal—in most places, if the house is not taking a percentage of the profits for itself, it's fine for fantasy players to wager their money.

In order to make more traditional fantasy sports legal, Slatery said, an exemption would have to be passed into law. Presumably, those who play fantasy sports for free are not in violation of Tennessee law.

In a statement, FanDuel seemed to welcome the idea of tweaking the current law.

"While we respectfully disagree with the opinion, the Attorney General expressly noted the legislature can make needed updates to antiquated state laws and ensure nearly one million Tennesseans can continue to enjoy all forms of fantasy sports—from any season-long leagues to daily play," FanDuel said. "A bill to protect fantasy sports and install important industry-wide consumer protections has already passed the state senate and legislators will be hearing from constituents from all across the state with a clear message: do not take away a game we love."

As the Tennessean noted, the current legislation, which is delayed in a House of Representatives committee, has passed the state Senate and would allow certain fantasy sports as long as the operator is licensed in the state (and has paid the state's required fees).

Once the NCAA basketball tournament is concluded next week, DraftKings and FanDuel will drop out of the college game. On Thursday, the NCAA confirmed, via ESPN, that the DFS sites also would stop taking action on all college sports.